iSOFT Acquires Northgate Healthcare Business

Fast growing UK Health IT firm iSOFT has announced that it has agreed to buy rival Northgate Healthcare Business from Northgate for £33 million in cash.

The Northgate Healthcare Business is a leading UK vendor of electronic patient record information systems to the acute sector of the NHS.

According to iSOFT the acquisition will make it the leading provider of electronic patient record software to acute hospital trusts in the NHS.

The deal comes just as the NHS is gearing up for a major expansion of IT investment, expected to include massive new investment in electronic paper record systems. Up to £5 billion additional investment in IT is currently being sought from the Treasury.

The new deal should significantly enhance iSOFT’s weight and clout in negotiations on the development of the industry consortia which are expected to be awarded strategic outsourcing deals to deliver major components of the national NHS IT strategy.

It should also help guarantee that iSOFT’s products are included in the list of nationally accredited acute hospital EPR software that the Department of Health has promised to draw up.

Northgate is the principal IT system vendor to 21 NHS Trusts and provides solutions to a further 50 NHS Trusts. The firm has approximately 80 employees, the majority of whom are located in Warrington and Stirling.

In the year ended 30 April 2002, the Northgate Healthcare Business made a pre tax profit of £0.4 million on turnover of £10.6 million. Net assets at 30 April 2002 amounted to £3.6 million.

Northgate will now focus on local government and law enforcement in its public sector division. Chris Stone, Chief Executive of Northgate said: "The sale of our health business will generate significant funds for the development of our business in other areas such as managed services, which we are pursuing vigorously."

The acquisition of the Northgate Healthcare Business follows iSoft’s acquisitions of ACT Medisys Limited in February 2001 and the UK and Australian operations of Eclipsys Corporation, Eclipsys Limited and Eclipsys Pty Limited in May 2001.

For the financial year ending 30 April iSOFT reported an operating profit of £13.1 million on a turnover of £60.1 million.

Completion of the acquisition is expected to take place on 31 July 2002.